Recent research shows that the majority of hedge fund managers are expecting a difficult year as regulatory reform and tougher competition increases. Fees (often 2% of assets managed plus 20% of profits in investments) are also expected to come under pressure.
In 2009, the $1.6 trillion hedge fund industry recovered from 2008’s losses with an average 19% return but the sector appears to have been unprepared for subsequent changes that left funds, on average, flat between January and May 2010 (Hedge Fund Research).
Research also indicates that many expect to see more new hedge funds launched this year by newcomers and by existing firms that are planning to roll out new portfolios – despite institutional investor nervousness, suggesting that the importance of seed capital will increase.
The US House of Representatives gave final approval to financial overhaul this week and the Senate will vote later this month. This follows last month’s new EU-wide rules affecting bonuses paid to senior executives at hedge funds – the first such pay regulation affecting hedge fund managers operating in the City of London.

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